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Global Category Intelligence

Q2 2025

Alert - The Continuing ILA-USMX Labor Dispute: A Major Threat to the Supply Chain

October’s three-day strike by the International Longshoremen’s Association (ILA) exposed significant vulnerabilities in the logistics, labor, and supply chains that connect the US East and Gulf Coast ports with global markets. Approximately 45,000 maritime workers walked off the job early Tuesday morning, primarily over two issues: wage increase and the impact of automation on job security.

Union laborers stopped work after their six-year contract with the United States Maritime Alliance (USMX) expired, shutting down 30 major seaports critical to the U.S. economy, including some of the country’s largest. Overall, the affected ports handle about 50% of the imports to the US, and nearly 70% of containerized US exports.

The ILA is North America's largest union of maritime workers, representing over 85,000 longshoremen on the Atlantic and Gulf Coasts, Great Lakes, major U.S. rivers, Puerto Rico and Eastern Canada, and the Bahamas. The USMX represents employers of the East and Gulf Coast longshore industry. Membership consists of Container Carriers, including the largest carriers and carrier alliances worldwide, all major Marine Terminal Operators, and Port Associations representing each port on the East and Gulf Coasts.

Industries Impacted

The automotive industry depends on East Coast ports, as a significant volume of critical components are imported from Europe. Other industries significantly impacted by labor strikes along the East and Gulf Coasts are retail and consumer goods, pharmaceuticals, and healthcare supplies, among others. Port delays can disrupt inventory cycles, affecting seasonal sales and causing significant financial losses during peak periods like the holidays. Each day of strike action on the East and Gulf Coasts can lead to severe backlogs, often requiring multiple days to recover fully due to compounding delays. Estimates suggest that each day of inactivity at a major port can add roughly four to six days of additional work to clear backlogged cargo and resume normal flow rates.

Agreement and Remaining Issues

After negotiating a 62% salary increase in a tentative agreement, the ILA and USMX extended contract negotiations through 15 January 2025. Should a stop-work action occur again, this creates a challenge for the supply chain, as shipping impacts for the holidays (including Christmas and Lunar New Year) begin ramping up in November and December.

Among the key areas of disagreement are automation and job security, pension and retirement benefits, and health and safety provisions. This means that another work stoppage could occur during one of the busiest shipping seasons of the year. However, we anticipate that both parties will reach an agreeable solution between now and mid-January.

Possible Impacts If Another Work Stoppage Occurs

Port Congestion and Delays: A strike or slowdown could lead to significant bottlenecks at East and Gulf Coast ports. Impacts included significantly slowed unloading and loading operations. Cargo at these ports could build up. Also, ships would likely be unable to dock or offload cargo on time, disrupting shipping schedules and causing delays.
Increased Costs: Congestion and delays would likely increase storage fees, demurrage charges, and other costs. Also, limited port access and rerouting demands would likely drive up prices for alternate shipping methods, like air freight, or inland routes like rail or trucking, leading to surcharges and raising the overall logistics costs.
Inventory Shortages: Retailers and manufacturers reliant on just-in-time inventory may experience stockouts, especially for imported goods, potentially impacting seasonal and consumer electronics markets.

Recommendations for Mitigating Supply Chain Risks

If all the East and Gulf Coast ports shutdown in another strike, companies can still mitigate some of the impact by focusing on these key strategies:

West Coast and Canadian Ports: Redirecting shipments to unaffected West Coast or Canadian ports (e.g., Vancouver, Prince Rupert) can help avoid a complete logistics halt. While congestion will likely increase at alternative ports, they could provide a viable backup when East and Gulf Coast options are unavailable.
Expand Air Freight Capacity for High-Value Goods: Air freight is more expensive but can ensure critical or high-value goods reach their destination with less delay. Companies can arrange for a temporary increase in air freight capacity to avoid long delays, especially for perishable, pharmaceutical, and high-tech products.
Leverage Inland Transport Options: Inland transport from alternative entry points, such as West Coast ports or land borders, could be a workaround. Establishing strong rail and trucking connections from other ports can move goods across the country, helping reduce dependence on the impacted regions